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Australia trade surplus breaks long drought as exports boom

Australia trade surplus breaks long drought as exports boom article image

Australia boasted its first trade surplus in almost three years in November as surging commodity prices boosted export earnings well beyond expectations.

Australian Bureau of Statistics figures released last week showed a trade surplus of A$1.24 billion ($908.92 million) in November, far above forecasts of a A$500 million deficit.

Exports jumped by 8.4 percent, or a whopping A$2.3 billion, to top A$30 billion for the first time ever. Coal, iron ore and rural exports all enjoyed double-digit gains, while imports were unchanged on the month.

This ended a 31-month run of deficits and is the boom is expected to continue as prices for many key resources remain strong on the back of sustained Chinese demand.

The Reserve Bank of Australia's index of commodity prices, which mirrors the country's resource mix, surged 11.8 percent in November and another 9.3 percent in December.

Star performer

That left the index up almost 40 percent on a year earlier, while bulk commodities alone were 85 percent higher. Much of that is still not fully reflected in the official trade numbers.

The farm sector is another star export performer. Export volumes of wheat are set to be swelled by a bumper crop after the government raised its forecast for production during the 2016/17 season by more than 16 percent.

With harvesting underway, 2016/17 is shaping up as Australia's biggest wheat crop ever.

All of which has helped stabilise sentiment in the resources sector after a run of tough years, and should underpin jobs and wages going forward.

Source: Reuters

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